Dealing with the fallout from the salary surveys—increasing your salary and evaluating the salaries of your IT professionals.

Salary Surveys: Managing The Pain

Dealing with the fallout from the salary surveys—increasing your salary and evaluating the salaries of your IT professionals.

Here’s another binary split: Some of you are managers and some of you are managed. But that’s where the split ends because I know that, to a degree, our salary survey is bad news for all of you managers. If I were you, I’d run to the mailroom and confiscate all copies of MCP Magazine and block access to our Web site. 

There are three possibilities: Your employees are making less than our survey, they’re making more, or they’re right on the average. Looking at it in reverse, if their salaries correspond to the survey, good work, but you’ve merely bought yourself some time. The last four years, each survey has shown a steady increase, so prepared to bump up your budget. 

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If Your Employees Are “Overpaid”…

Let’s say your employees are making more than the salary average. Is that a big “Oops”? Not at all. First, look at your business model. Are you making money? Sure, you might make more if you paid less, but then again, you might not—after all, your employees are your most important asset, so why put that at risk? Second, you’ll have less worry about your employees being lured away by more money. Does that mean you’re home free? Of course not. If your work environment sucks, if you’re abusive to your employees, or if their cars keep getting stolen from the parking lot, paying a higher salary merely delays the inevitable. 

By the way, if you’re not making money and you think your payroll is to blame, here’s a tip: cut headcount, not salaries. You might think you’re being fairer by cutting everyone’s pay, but instead, you end up with everyone being unhappy, rather than just the people you let go. As Machiavellian as this might sound, people can more easily justify and rationalize another’s misfortune opposed to their own. 

If Your Employees Are “Underpaid”…

Your employees get their copies of MCP Magazine, flip to the salary survey, and see they’re below the average. Time to panic? Yes! But get over it quickly because you have work to do and decisions to make. First, how much money do you have? Can you afford to pay more? If not, might as well close the doors now—your best people will probably leave, and if you’re left with mediocre people who can’t get a better salary elsewhere, you’re going to have a hard time competing for customers anyway. 

Next, objectively evaluate your employees. Whom can’t you afford to lose? Which employees make what you believe they’re worth, even if it’s below our survey figures? Adjust accordingly.

No more money? No problem! Those of you who have attended my “Moving into Management” sessions at MCP TechMentor know my theory that money isn’t the prime motivator for good technical resources—it’s important, but it isn’t everything. Technical people tend to be motivated more by non-monetary factors, such as quality of work-life issues. So, get creative. How much would it cost to provide free drinks and snacks? What about a pool table, a foosball table, or MP3 players for everyone? 

Here’s an example: One of your key people is making $10,000 less than our survey states. You could give that employee a $10,000 raise, but you know what? The awful truth is that the employee won’t remember it six months from now when he’s fighting with his underpowered laptop loaded with obsolete software. You’d probably accomplish more by paying a $5,000 increase plus a $5,000 equipment/software/training voucher—now you’ve rewarded and empowered that employee. In another example, Greg told me about an employee who negotiated a small raise, but compensated for that by negotiating for flextime that lets her work a four-day week. 

There are limitations to the above theory—employees must be at a sufficiently high income level to start. For minimum wage employees, money is everything. Also, the ability to recognize and appreciate the work environment vs. salary is proportional to the employee’s age, experience, and maturity level. 

One final thought: Alan Greenspan hates surveys like this—can you say inflation? I can safely predict that, barring a macroeconomic disaster, next year’s figures will be higher, and you’ll have to face these issues again. Shame on you if you’re caught unprepared next year. As a manager, your job is to plan, organize, and control your business year-round.

About the Author

Steve Crandall, MCSE, is a principal of ChangeOverTime, a technology consulting firm in Cleveland, Ohio, that specializes in small business and non-profit organizations. He's also assistant professor of Information Technology at Myers College and a contributing writer for Microsoft Certified Professional Magazine.

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Reader Comments:

Wed, Sep 5, 2007 Anonymous Anonymous

The author neglected to talk about starting salary in his discussion of why people are paid the way they are. You might have started fresh out of school and had little bargaining power. You were hired at a meager salary and while you get above average raises every year, few companies will go out of their way to give you more than 5% per year. In fact, you might only get 3 or 4% per year. This barely keeps you ahead of inflation. You also might get another 5% if you get promoted. That said, all of those raises don't add up that quickly.

Your pay in a company is most often determined by your startting salary. Also, your promotions are often determined by the same as well. It costs a company more to promote someone with a lower salary. In the case of two people, one making $40k and one making $60k, it would cost a company much more to promote the former into an $80k role. The overall compensation of promoting the first is $80k for the higher level job and $60k for the person they pass over. In contrast, by promoting the person with the higher salary, the overall compensation is just $80k and $40k. Thus, the company saves $20k per year by promoting the person with the higher salary.

Do you think you will be $20k better than the next person?

Moral of the story is negotiate the highest starting salary possible. It will be the largest determinant of your future salary and it will also in many ways determine how far you go in a company.

Mon, Jul 5, 2004 rich stoddart

Over the past few years the it industry has been volitile. Layoff, downsizing, Going out of business, has made it so one has to change jobs frequently. With the "internet revolution" behind us, it is hope that the it industy will stabalize some more.

I mention this, because I've been more readily able to get raises each time I change jobs, in the order of 5-10k for each job change.

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